The Rich Habits You Need To Become A Millionaire In 2023 [MASTERCLASS] EP 1426

22:16A half a percent? You're still half a billionaire. Your$50 ,000 is worth$500 million, give or take whatever the numbers we're doing right. The point is, that is a massive victory. The guy who put$10 ,000 and he gave it to Berkshire Hathaway in 1974. I don't know if you've heard this story. You know, Warren Buffett is starting. He says, I'll give you$10 ,000. Never touches the money. He goes back to his regular job, makes 100 grand a year. You know how much I tend to, have you read this article? No, tell me. The$10 ,000, if you go on Business Insider, you pull it up, is worth$780 today. $780 million.

22:48Million. Never did anything to it. So that's the part about patiently aggressive. Yeah. It's very hard to do. But the doubles get bigger later on, not early on. The doubles are bigger year 15, 20, 25. That's what Papa talks about. Just like his successes, he's lived longer. You know, he's just stayed around longer to let the money continue to compound. and that compounded interest is where it's at. What's the three greatest investments you've made in yourself, and would you recommend those same investments in other people, or what should they be doing in their life right now? So, you know, I will tell you, I went to a Harvard OPM program one time, and I spent...

23:21OPM? OPM is Owner President Management Program. So if you run a business that does 10 million or more, you get to go to it, and it's three years of three weeks living on campus, right? I went there, but I didn't go afterwards for different reasons, but I went there, when I spend that$50 ,000 and I was on campus for three weeks, you spend three weeks with 144 people from 64 different countries. So watch what happens. I'm sitting there and at this point of the game, I have no idea what it is to be a CEO. I've gone from being an employee to a salesperson to a sales leader to a good manager, but I don't know what it is to be a CEO.

23:55I have no idea what it is to be a So I sit next to this guy, he becomes my teammate, my partner. He owns the Victoria's Secret of New Zealand and Australia. The reason why I'm laughing is because the last day, eight of us were chosen to go present a business opportunity. So he keeps telling me, Patrick, I'm going to kill it. Just watch what I'm going to do. I'm going to scare the hell out of Lynette. I think the lady's name is Lynette because she's the main person that does it. Watch what I'm about to do. So he goes up on stage. Louis, it's a very simple guy. I mean, good-looking guy, but he's not a charismatic anything.

24:28He just goes up on stage. He says, let me tell you why you ought to invest a million dollars into my new lingerie line. He says, here's a PowerPoint. Here's a PowerPoint. You see all the sexy women here? You know what? I think it's more important for you to see this face-to-face. Ladies? No way. Brings them in. Seven models come in half naked wearing the lingerie. The entire place, all the entrepreneurs are going crazy. But the teachers are furious with them. The ladies are running up, takes their jacket off, is trying to cover all these women. It was phenomenal, right, to see this here. But the point is.

25:02On Harvard's campus, right? Think about it. Here's the part. Five years goes by, I'm talking to you about it. That's called marketing, right? You remember it. I remember it. But when I was sitting next to him, I said, listen, man, I'm trying to learn how to be a good CEO. What do you suggest about being a good CEO? He says, man, I got 7 ,000 employees and have seven CEOs that report directly to me. I spent three weeks with this guy telling me stuff that he does with his CEO. He's not a motivational speaker. I don't even think he's got 1 ,000 people following him on Instagram. He's worth a couple billion.

25:32He's not an influencer. But those three weeks of talking to, I was like a kid in a candy store trying to pull information out of this guy. And it was all technical stuff. It wasn't motivational stuff. What time do you wake up? What's your daily routine? None of that stuff. It's, what do you do when you're trying to hire a person and you know you've got to give him equity, but you're afraid to give him too much equity and he leaves early and you protect yourself, that if you fire him, does he still get the other two-thirds? How do you do this? Well, you set it up this way. What do you do to make sure your attorney that you have, that attorney that you have, who is negotiating with the other attorney and he doesn't really want to go to court, so behind closed doors they're settling and he's not really working on your side, he's working on the other side to kind of speed it up.

26:13And how do you get him to, well, you got to get another attorney who holds him accountable. I'm like, these are the things that he said to me that you can't read about in places. So you said three investments. That's one of them. Vistage was 100 % a great investment because we met once a month for three, four years with a man named John Morris. John Morris is a local guy, Santa Monica, a guy. It'd be great for you to get connected with him. We're sitting in a meeting one time with John Morris and one of the entrepreneurs going out of business. And he says, guys, I got bad news. because you would start the meeting and you would say, here's my personal life, here's my health, here's my marriage, here's my business, here's my kids, and we would all talk amongst each other.

26:49Everybody had to sign NDA so you don't tell your story. But one guy gets up and he says, guys, I got bad news. I'm about to go out of business. Why? If I don't get a half a million by this Friday, we're shutting down. If I get it, I'll last another year and a half and I think we'll make it, but I'm shutting down. This is what John does. Tell me what do you need for half a million. What are you willing to give up for the half a million? What are you willing to do this? He says, give me a second. In front of all of us. calls a guy, no, calls a guy who is in his business, same industry, says, take this call, go talk to him, terms, boom.

27:19Guy comes back ecstatic. By Friday, half a million was in his account. Wow. This is the kind of guy John Morris is, right? So Vistage to me was watching people from different industries every month for nine hours, for one day, nine hours, and everybody would share their problems. It was$1 ,500 a month, some number like that, 100 % well worth. If you get qualified to go on because vistas you have to do it's just like tiger 30 have you ever do this thing called tiger 33 i think it's called it's kind of like you've got to have 50 million yeah there's there's there's things like that everywhere this is one of them we got to reveal kind of your financial plan you're wondering who you are yeah there's a lot of that happening right now and i think it's great i think it's great if it's by real business people not social media influencers and let me explain to what i mean by this what social like for example if somebody wants to learn how to create a podcast.

28:08I want to go learn from somebody that's running a success. Like I remember I think you taught a bunch of people with how to monetize webinars and podcasts. Like you were the guy that taught people how to do the webinars. And then you made people millions by the way. You made a lot of people a lot of money with what you were doing with webinars. A time that people didn't think webinars had money. Yeah five, six, seven years ago. Yeah I mean that at a time that nobody was thinking about it right. So so I go on listen how you do webinars why are you doing webinars? Oh Louis taught me how to do this.

28:31Lewis, Lewis, yeah, Lewis House. Oh, no, webinars. Yeah, okay. So, but this is not webinars. This is not, this is about these guys. How did you go from - Bigger strategy on everything. Yeah, this is, this is stuff that you sit there and you're like, wow, you guys are doing how much per year? 820 million dollars. How many employees you got? 922. How many people on your board? Seven of them. How do you handle conflicts? Like, this is the stuff that you talk with these guys, right, at this So I recommend the OPM program. I recommend the Vistage program. And I'm an obsessive reader, man. I mean, I don't know how many articles and stuff I read.

29:10So I would recommend subscribing to when there's like Business Insider that you can pay$99 per year, pay for it. If there's a Wall Street Journal that you pay$600 per year, pay for it. If there are these handful of stuff that you can get that's not just the general news, if you spend$1 ,000,$2 ,000 on these news sites that are sending the elite articles that's different than the main ones, don't hesitate. Pay for it. Because everybody's going to talk about the general stuff, but that additional stuff is written by... It's advanced stuff. Yeah, it's advanced stuff. So imagine like... Insider. It's the insider stuff written by the CFO of Snapchat that's telling you nine ways to protect yourself against cybersecurity that will be boring to other people.

29:49But you're looking and you're saying, this was free. This was legit. So those kinds of investments is what I would say to you. And if you lost your job right now, what investment should you make in your stuff? If I lost my job right now and I don't have a job lined up within four weeks, that means I have a very weak contact list. So the problem is a long-term problem. So you are the long-term. If you cannot replace yourself with a job within four weeks, you have a terrible contact list. Relationship contact. Yeah, exactly. Because you should be able to replace your job within four weeks if you've got a solid contact list.

30:22Why shouldn't you be? You should, like, you know, a person gets, like, we fired a guy named Mark, and he was with AIG for 22 years, and I love this guy. But he just wasn't a fit, so I talked to Mark. I said, Mark, this is not going to work out, but I'm telling you right now, I got a job for you lined up at Columbus. He says, seriously, I said, interview set up. See if Columbus calls me for a review. I said, no question. This guy's a phenomenal guy for you. He gets hired like this with him too. You should. If you have the contacts like this, you ought to be. So if you don't, it means the problem is you either don't have enough value in the marketplace or your contacts are weak.

30:57When you think about someone you want to connect with, what goes through your mind of the sequencing of how do I reach out to this person? I do a lot of research on the person. I do a lot of research on the person. You're really good at that, yeah. A lot of research on the person. I think people don't know how valuable understanding who someone is and what their history is. And what makes them tick. I agree. How meaningful that is when you do that. Yeah, I agree. And I think you did this when you first interviewed me. You just knew a lot about me. And you did research. And I'm like, man, it takes so much time and energy.

31:25And when you're running a business with 1 ,000 employees, you're doing 10 sales calls a day, you're a husband, you're a dad. how do you manage building relationships when you have so much going on though? You have no free time. Yeah, so this goes into at what level you want to go to in life. Meaning, there is levels in this game, right? Like, listen, Gary Payton is alpha, but he's not alpha when Michael's in the room. When Michael's in the room, Michael's the alpha. Kobe's an alpha, but not when Michael's in the room. But anybody else in the room, Kobe's the alpha, including Magic Johnson, including Shaq.

32:05But when Barclay's in the room with Shaq, who's the alpha? Shaq's the alpha. But when Barclay's in the room with Carmelo Anthony, Barclay's the alpha. Everything's about levels, right? So what level do you want to go to? So if you want to go at the next levels, it's going to require you to be a little bit more meticulous and detailed about your strategy, about the kind of help you're going to need, the kind of research you're going to need, the kind of relationships you're going to need. And then figuring out your scheduling. Sometimes people want to have the four-hour work week. I'm not a four-hour work week guy, but some people want that lifestyle.

32:40And you have to give credit to Tim Ferriss because Tim Ferriss started a movement with a bunch of laptop entrepreneurs all over the world. And guess what? They love it. When I talk to these people that read four-hour work week, and I'm in Malaysia, and look at my life. And I make a few hundred grand a year or a few million a year or whatever it may be. Good for you. I could never, I'm a terrible vacation guy after three days. I'm a three-day guy. But I know myself. If I go to Bora Bora, if I go to Greece and we have to go after three days, my wife will say, babe, you good? Like, babe, it's three days, babe.

33:09She says, I get it, babe. Just kind of. And we're typically go because we're entertaining people. We're not going. It's like we're taking 500 people, 400 people. So we're entertaining people. It's not like, you know, you're going because it's when we go, we go, we get our stuff done and we come back. and we have a great time together because now we have a system. When you have kids, it's different because you can go longer with kids because you're vicariously living through them. I like going to Universal Studios. I can go with my kids to Universal Studios because I see how he looks at Harry Potter and, you know, the spiders and this stuff.

33:37It's beautiful when you see their imagination, right? But going back to the question you're asking, so how do you find time to do research? How do you find time to do all this other stuff? if you want to compete in the top 1 % of 1 % of 1 % of 1%, the price is a bigger price. And Lewis, there's no way to describe how to do it. There isn't a formula for it. You just have to figure out a way how to do it. If it means I come home and I have to watch a person's interview from 11 o 'clock to 2 o 'clock in the morning, and I come to the office at 8 a.m. to do my interview, and I have to come and go read through 20 pages of notes, I have to do that.

34:14And if I don't do that, you can tell in the interview. If I do do it, you're like, how does he know that guy's date? How does he know when this happened at this time? How do you know when this happened? It's a lot of research. The level of detail and attention, people will remember for decades. They'll remember and always think back to, you know, that person really cared. That person was really thoughtful. That person was genuinely interested in me. And they'll just continue to remember that. And good things will come to you when you come from that place. when you constantly do that extra work to care about someone.

34:47What do you think are three things that rich people do differently than the poor people or people that aren't thinking about building wealth in that way? Number one, and you'll be surprised to hear me say this, they don't take inordinate risk. You're going to find that the majority of very wealthy people are extremely conservative in how they invest. They don't need to beat the market. They've already done that. They just need to preserve their capital. So what you find them doing, and I don't know what that number is for you. Wealth means different things to different people. But when you are fortunate and you become wealthy, what you'll find is most of those people do not take a lot of risk.

35:28And they invest in things that are very long term. They don't use a lot of debt in most cases. They don't use leverage when they're investing. They don't take very speculative positions on. You know, you hear that they might buy Bitcoin or they may, you know, buy a speculative stock. But if you look at it as a percentage of what they're worth, it's nothing. Right. And so they're willing, when they're making that investment, they're saying, I'm willing to lose it. It's entertainment almost for me. It's not something I think that I'm going to have to live off. and the other thing I found because I advise a lot of wealthy people because my companies that I invest in you know which I have over 30 at any one time 10 % of them are being acquired by a private equity firm or being bought by a strategic and I've known the entrepreneur and maybe it's their first liquidity event I try and help them on that journey and some of them you know get a hundred million or 80 million dollars we've got plenty of situations like that and they're young.

36:29And what happens is you find out later that entrepreneurs are actually really bad investors. They're very good at running a business and they focus myopically on that their whole lives. But when they actually get liquidity, it's usually their husband or wife that was the person that was taking care of the family and mitigating the risk. And they're the ones that are the better investor. And that's why I say in a family, you have to have a team approach. but I've learned this that you really, you'll find that what's successful about families is they know what they're good at or wealthy people and they know what they're not good at and they don't try and do things they don't understand.

37:09And this is, it's important because you have to say I have limits on my skills. I know what I'm good at but I've been very fortunate and I'm not going to go risk anything now doing something I don't know. I see that characteristic a lot. And the other thing that I would say is different, and this may have a lot to do with the concept of karma, another lesson I learned from my mother, that if you're successful and you talk to wealthy people, you'll always find that there's something that motivates them to be philanthropic, to give money to something that matters to them. and that's the whole idea of giving back.

37:53You've been successful and you have to find the cause that motivates you. You're willing to spend your time and money supporting. That is a big difference because if you believe in karma, and I do, when you do that, it kind of protects you against the horrific downside of something bad happening to you because you're just so greedy. You can't, when you had success and you're a wealthy person, if you show me a greedy, wealthy person, just wait 10 years. Then you'll just show me a person. Somehow karma will separate their money from them. That's what I find. Or they'll get sick or something will happen where, yeah.

38:32I really believe this. I really believe it. And you've got to find those things that you can give back on that means something to you. But if you abuse karma, it's got a special gift coming for you. So finding ways to give back. Are you giving back in a lot of other ways, philanthropically right now as well? Yeah, you know, I like to have a concentrated approach. I call it five and five. I prefer to pick five charities, or in our case, we support a dance company. We support some hospitals, some educational institutions. And, you know, give enough that it's a material gift and that I have a say in how it's spent very often.

39:16and above all, I like to see expense ratios reported. I generally don't support charities that can't provide, just like an investment, some kind of a statement on where my money went. Right. And that is actually something I think Bill Gates is famous for early on, saying, why can't I treat my charitable investments as I do my private ones and ask for some performance metrics? And I kind of believe that he's right. I'm curious, do you think the middle class is financially stuck? And if so, what can they do to start achieving more financial freedom? No, they're not stuck. And one thing that's democratized, and we've learned it since this whole pandemic started, you can create a new opportunity for yourself online with virtually no barrier to entry.

40:03Many, many people did it as a side hustle, and it's now producing more income than their first job. The whole idea of trying to solve for customer acquisition using creativity, using video, using music, using photography, using storytelling, animatics, graphics, to actually sell a service or product, starting locally and then expanding. There's millions of new businesses that have been started during the pandemic. We see them every day on Shark Tank, but they are basically taking middle class people out of middle class. And I'd say, if you look at Shark Tank, we have plenty of people that have been working in the middle class for years and all of a sudden exploded to the upside with a great servicer idea that they did online.

40:46And that's why I really think people should empower themselves. You can try things online. You can see what works. You don't have to get the first one right. But those tools are there for you. And most of this is done on Facebook in geolocked advertising. 80 cents on the dollar of what my company spent is on Facebook. So I always find it very funny to see people bashing Facebook saying how evil it is when really it's running small business in America because they have that unique geolocking advertising feature. So we shouldn't shut it down until we find something better. Yeah. And what would you say are a couple of qualities that you really look for when you're looking to invest in someone or when someone has an idea and whether you invest them or not, you're like, this person's going to be successful, whether it's in this thing or something else, what are those two or three qualities that all of them seem to have in your mind, whether it be a leadership skill or clarity?

41:42What would that be? I prefer to invest in entrepreneurs that have failed once or twice before, that have felt the sting of failure and have gone down the road and not had success the first time because their motivations are completely different than a more arrogant first timer that thinks everything they do is going to make$100 million. It just doesn't work that way. And so that's one thing. I love, there's three things you have to have the ability to do and know if you're going to be successful in business. Number one is you have to be able to articulate your idea in 90 seconds or less explaining to me why anybody would want that product or service.

42:18And if you take more than a minute and a half, you're never going to be successful. You're just not. And number two is you have to be able to explain why you're the right person to execute on that idea. In other words, what is it about you that knows how to take this idea, which good ideas are a dime a dozen. Executional skills are really hard to find. So what is it about you that can execute on this business and make it work? I mean, those two together start to be really interesting because then as an investor looks at it and says, well, I'm going to mitigate my risk. I've got a great executional expert here and I've got a great idea.

42:55And then lastly, the one that I think you have to have a good command of. You have to know your numbers. You have to be able to explain gross margins, market share, break-even analysis, how many competitors, how fast can you grow. And I think, you know, that's who I want to invest in, someone who has a command of all three of those. That's probably got more than a 50 % chance of being successful if they can do that right. Yeah.

43:22I love your take on things. I wanted to know for those that are in their late teens, early 20s, what conversations should they be having with friends or mentors around money? I feel like a lot of people are afraid to talk about it or they don't share how much they make or how much a home costs or whatever. It's just like this hush-hush mentality. what should we be talking about in our late teens early 20s or even 30s but what types of conversations should we be having to shift the narrative around money so we can start attracting it in our favor as opposed to rejecting it well first of all we need to teach it in high school luckily here in florida it's been put into the curriculum and i'm very proud of that you know i used to be in the educational software business there's 110 000 school buildings in america The majority of them in New York and Florida, Texas and California, and abysmally, most of them don't teach even debt.

44:17They don't even teach how to use a credit card, which is ridiculous. We've got to change that, and luckily we are. We're starting to see it creep into the curriculums in all the major states, which is good. But I think parents have a responsibility to talk about money, which is always sitting at the table every day. It always is. And getting their kids to understand how a credit card works is very important. And again, I talked about not entitling. That's important, too. But within your friends, I mean, don't be embarrassed to talk about money. You're going to be talking about money for the rest of your life.

44:45It's always going to be part. You can't live without it. You have to deal with it. It can cause great joy and give you personal freedom or can be catastrophic in your life, destroy your happiness completely. Your choice is where does it fit? Do you want it to destroy your life or would you prefer that you understand how it works and respect it for what it is and deal with it? that's a personal choice people have to make. And I would say the best way to do that is learn more, talk more about it, and don't be afraid to discuss it. I don't care what age you're at, but certainly at the age of 16, you should be discussing that.

45:19And above all, taking 10 % of whatever anybody gives you, your grandmother, your birthday gift, whatever it is, and set it aside and start investing it. The earlier you start, the less pressure you have when you're in your 60s. Because you've got to have at least a million and a half bucks in the bank. And you can, if you just save$100 a week, That's what Beanstalks is all about. That's why I got involved in Beanstalks. That's the whole idea. And do you think someone in their late 40s and 50s, do you think it's too late for them to start learning about financial literacy if they've struggled in their 20s and 30s and 40s?

45:52Do you think it's too late to start investing and saving? What should people do in their 40s and early 50s? No, they should at any age. I mean, the truth is changing your spending behavior in your 40s is difficult, but you can do it. And at that age, you should start saving 20 to 25 % of what you're taking in, which sounds hard to do, but it isn't. You just stop buying those$5 coffees and you stop buying stuff you don't use. Anybody can go look in their closet and see all the crap they bought that they never used. And basically you killed that money when you did that. You bought something that you could have had invested and it could have grown 6 % to 8 % a year for you, but instead you bought some piece of junk that you're throwing out now.

46:34Everybody's guilty of that. I actually think my mother was right. She's always said that people can save 20 % They just don't have the backbone to do it and she did and she died a very wealthy woman She had a secret account she kept from both of her husbands and I was the older brother and was executor for the state And I remember the lawyers calling me up saying you got to come down here your mother your mother had a lot of money Hmm, and I always wondered how she did it She basically bought dividend paying stocks in her 20s and a whole bunch of telco bonds 50 50 portfolio. She loved telco bonds.

47:06They used to yield 6 % in those days. And she loved dividend paying stocks, S &P stocks. And over the 50 years that she had this account, it just provided massive appreciation. Should people die wealthy or should they die broke because they spent their wealth on charity or giving back or whatever, living their life and going on trips and adventures? What's your philosophy there? You know, the trouble these days is you don't know when you're going to die. You make certain assumptions and then you live an extra 10 years or 20 years. And you live at a time in your life when you really needed that money for your comfort.

47:44You know, it's probably better to not make an assumption, oh, I think I'm going to die when I'm 88, because you don't know what technology is going to provide or what your genes really have in store for you. I would prefer to die with a good chunk of dough in the bank and then gift it to a cat. A cat? Yeah. You know, cats only last 14 years. It'd be a great 14 years for them. I'm just kidding. I'd probably give it to a combination of, you know, in my case, I feel safe because I can roll it into a trust that doesn't provide for you after, you know, you finish college. So I don't feel I'm entitling anybody or cursing anybody's future.

48:22So I'll just probably roll it into one of my family trusts and say I don't need it anymore. The only thing I'm taking with me to the afterlife is my watch collection. All of them. I'm going to eternity. I got a lot. I don't even say anymore how many I've got. I haven't, you know, really, I'm very proud of my watch collection. And it's incredibly, it's got some amazing pieces. And it's taken me years to build this collection. And I'm going to need it to tell time and eternity. So I'm taking it all with me. What do you think is the best investment you've ever made in yourself? Well, the best investment I ever made in myself was myself.

49:00You know, you often doubt yourself, but, you know, it was, you know, I went through some very tough times, right from when my mother cut me off through several business ventures I failed in. And then you just don't know, serendipity knocks on the door. The thing is, as an entrepreneur, you just got to keep getting up every day. You have to stay in the game. You have to stay in the race. It's very, very hard. It's like that story of the guy with his fiancee. You just have to focus and you have to find somebody that's willing to focus with you. But I'm glad I did what I did. I wouldn't change a thing.

49:32I've made plenty of mistakes, but it is who I am today and I'm very proud to be able to offer the things I do to my family and to support different initiatives and charities and support the arts and collect watches and guitars and cook and all these things are made available because I've been able to focus on being successful in business. And that is the great American dream. It's going to remain that way forever. It's the essence of why Shark Tank works. I'm very proud to be part of the platform. I can guarantee you 13 years ago when we started this thing, we had no idea what was going to happen.

50:13I mean, it's just, who knew? But now, nine-year-old girls to 99-year-old men come up to me saying, look, let's talk about that deal last week on Shark Tank. And I'm happy to do it. I mean, I think it's a wonderful outcome, and we're proud of it. And as we start to work on season 13, I mean, it's, you know, no television show last 13 years. Practically none, less than 5 % of them. It's amazing. So it's great, and we're proud to do it. And I don't know, that's the whole idea that I encourage people. Well, don't pursue entrepreneurship out of greed of money. You will fail for sure. Because every time I talk to anybody that's had a big liquidity event, I say, you know, did you see it coming?

50:52And how did it happen? They said, we never saw it coming. We were just working one day and then boom, I was poor, now I'm rich. That's always the way it is. It's not that you're saying you're counting, you know, your dollars. You don't have any until one day, boom, something happens. And then the funny thing is you find yourself right back to work. I hope you enjoyed today's episode and it inspired you on your journey towards greatness. Make sure to check out the show notes in the description for a full rundown of today's episode with all the important links. And if you want weekly exclusive bonus episodes with me personally, as well as ad-free listening, then make sure to subscribe to our Greatness Plus channel exclusively on Apple Podcasts.

51:35Share this with a friend on social media and leave us a review on Apple Podcasts as well. Let me know what you enjoyed about this episode in that review. I really love hearing feedback from you and it helps us figure out how we can support and serve you moving forward. And I want to remind you if no one has told you lately that you are loved, you are worthy and you matter. And now it's time to go out there and do something great.